In 2012,W Co Had a Dividend Yield Ratio of 0

question 107

Multiple Choice

In 2012,W Co had a dividend yield ratio of 0.3% and J.C.Co.reported a yield of 6.9%. What is the most likely reason for W Co's relatively low dividend yield in comparison to J.C.Co's ratio?

• A)W Co is paying little in dividends because it continues to grow through expansion of store locations financed by operations.
• B)W Co does not generate sufficient cash from operations to be able to pay a dividend.
• C)W Co does not generate sufficient operating profit to support declaring a dividend.
• D)W Co does not have sufficient retained earnings to support declaring a dividend.

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Definitions:

Option Contract

A financial contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a specific date.

Exercise Price

The set price at which an option's owner has the right to purchase (for a call option) or sell (for a put option) the underlying asset or commodity.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a specific time period.

Delta

In finance, typically refers to the ratio comparing the change in the price of an asset, usually a derivative, to the change in the price of its underlying asset.